BUILDING A SAVINGS CUSHION IN A TIME OF EMERGENCY

If you are going to stockpile anything these days, consider liquid savings.

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A stash of easily accessible money to tap for emergencies is always important, but it is critical at times like these when people face potential layoffs and deep economic uncertainty.

Experts generally suggest having three to six months of savings on hand, but that can be tough for many people who are living paycheck to paycheck. At least one-quarter of American adults say they wouldn’t be able to cover an unexpected expense of $400, according to a survey by the Federal Reserve.

“There are far too many Americans who are financially unprepared for an economic downturn, and lack of sufficient savings will be most people’s Achilles heel,” said Bruce McClary, spokesman for the National Foundation for Credit Counseling, a nonprofit organization.

Don’t despair though — you can still start saving and even having a small amount in reserve can help. Here are a few things you should know to get things rolling:

GET STARTED

It’s never too late to start setting aside money.

If you are working, automate the savings. Employers will often allow you to have money from your paycheck deposited directly into more than one account. Consider having it sent directly to a savings account of some sort. If that is not an option, have your bank automatically draw it from your checking account on payday to a savings account. No matter how you get paid — the key is to make it part of your routine.

A good rule of thumb is to budget 50% of your income to essentials like housing and utilities, 30% toward non-essentials and 20% toward financial goals like savings and paying down debt.